What was the primary driver of the significant year-over-year decline in sales and revenues?

The primary driver of the significant decline in sales and revenues was the severe global economic recession, which led to substantially lower sales volumes across both the Machinery and Engines segments. Dealers also aggressively reduced their inventory levels, further contributing to the drop in Caterpillar's sales.

How did Caterpillar manage its costs in the face of declining sales?

Caterpillar implemented significant cost-cutting measures. This included reducing manufacturing costs, selling, general, and administrative (SG&A) expenses, and research and development (R&D) expenses. The company also benefited from favorable LIFO inventory decrement adjustments, which reduced the cost of goods sold.

What is the outlook for Caterpillar's sales and revenues in the near future?

Caterpillar's management believes the third quarter of 2009 may have represented the trough for sales and revenues. They are seeing encouraging signs of an economic recovery, though challenges remain. The preliminary outlook for 2010 sales and revenues anticipates an increase of 10 to 25 percent from the midpoint of the 2009 range, partly driven by the expected end of dealer inventory reductions.

How is Cat Financial performing, and what are the key concerns?

Cat Financial's revenues decreased by 14% compared to the prior year. Key concerns include lower average earning assets, an increase in the provision for credit losses due to adverse economic conditions, and higher other revenues impact from returned or repossessed equipment. Past due accounts and bad debt write-offs have also increased year-over-year.

CAT 10-Q Quarterly Report Q3 FY2009 — Revenue, Net Income, EPS

Summary

Caterpillar Inc. reported a challenging third quarter for 2009, reflecting the severe global economic downturn. Sales and revenues significantly declined by 44% to $7.3 billion compared to the same period in 2008. This reduction was primarily driven by lower sales volumes across both Machinery and Engines segments, as dealers aggressively reduced inventory levels in response to weakening end-user demand. Despite the volume decline, Caterpillar experienced a positive price realization and benefited from cost reductions, including favorable LIFO inventory adjustments. The company's profit per share stood at $0.64, a notable decrease from $1.39 in the prior year, largely due to the sharp drop in sales. Caterpillar's management highlighted that the third quarter likely represented the trough for sales and revenues in this recessionary period and expressed cautious optimism about signs of an economic recovery. The company remains focused on cost management, operational execution, and inventory reduction to navigate the challenging environment and position itself for future growth.

Financial Highlights

44 data points

Beta

Revenue

$7.30B

0.2% Gross Margin

Net Income

$404.00M

0.1% Net Margin

EPS (Diluted)

$0.64

Total Assets

$60.84B

Cash & Equivalents

$4.19B

Free Cash Flow

$1.72B

Financial Statements

Beta

Revenue	$7.30B
Cost of Revenue	$5.25B
Gross Profit	$1.33B
R&D Expenses	$327.00M
SG&A Expenses	$907.00M
Operating Expenses	$7.02B
Operating Income	$277.00M
Net Income	$404.00M
EPS (Basic)	$0.65
EPS (Diluted)	$0.64
Shares Outstanding (Basic)	622.40M
Shares Outstanding (Diluted)	635.50M

Key Highlights

1Total sales and revenues decreased by 44% to $7.3 billion in Q3 2009, primarily due to a 52% drop in Machinery sales and a 35% drop in Engine sales.
2Profit per diluted share fell to $0.64 in Q3 2009, down from $1.39 in Q3 2008, reflecting the severe impact of lower sales volumes.
3The company reported positive price realization across segments, contributing to offsetting some of the volume decline.
4Manufacturing costs decreased, aided by $120 million in LIFO inventory decrement benefits, contributing to improved operating profit margins despite lower sales.
5Selling, general, and administrative (SG&A) and research and development (R&D) expenses were significantly reduced due to cost-cutting measures.
6Cat Financial's revenues decreased by 14%, impacted by lower average earning assets and a higher provision for credit losses.
7Caterpillar's debt-to-capital ratio for Machinery and Engines increased to 49.5% at September 30, 2009, exceeding the company's target range, indicating increased financial leverage.

CATERPILLAR INC Quarterly Report for Q3 Ended Sep 30, 2009

Summary

Financial Highlights

Key Highlights

Frequently Asked Questions